Depreciation HVAC non residential

[sffdib]

Client is a tenant in a commercial property. He installed an HVAC system replacing an existing broken system. Does he depreciate as 15 year leasehold improvement? Or 39 years none residential property? or expense the cost?  Tenant has 5 year lease. 

[TaxGuyBill · Accepted solution]

There is no "leasehold improvement" category anymore, it is "Qualified Improvement Property".

However, that only applies to certain things on the INTERIOR of the building, and most commercial HVAC systems that I know of are external.  Therefore, it would be depreciated over 39 years.

However, HVACs now qualify for Section 179 for Nonresidential Real Property, so that is probably the best option.

[sffdib]

Thank you soooo much.